Banks need to change culture to protect customers

It will take more than a catchy phrase for banks to rebuild customer trust.

The recent wave of scandals involving the big banks and financial planning institutions has led to the term ‘change culture’ being bandied about by those very same organisations. But it will take more than a catchy phrase to rebuild the trust of customers.

Australian Prudential Regulation Authority (APRA) chairman Wayne Byres and Greg Medcraft, the chairman of the Australian Securities and Investments Commission (ASIC) both spoke yesterday at a business lunch organized by CPA Australia and agreed that the industry still had a lot of work to do to improve confidence and trust.

When asked about the comparison between the regulators’ demand for a better culture and the continued scandals, recently uncovered at the big banks,” Mr Byres agreed. "There is a lot of work to do still." 

"What we are trying to do is encourage a much more systematic approach to the measurement of culture, so it's not just 'I have a gut feel that things are pretty good'", he said.

Greg Medcraft, who said, “We’ve got a lot of people saying ‘we put customers at the centre of what we do’, and then you see all their actions, and you go, ‘There’s something missing there’, highlighted the disparity between the customer-focused slogans being used by banks and the recent scandals.

While agreeing that culture was vital, National Australia Bank chief executive Andrew Thorburn conceded that it was impossible to weed out all of the bad eggs in the industry. "Greed or poor ethics and integrity will drive people and it has been happening since whenever banking was invented," he said. "When that happens our obligation is to find it, address it transparently, firmly and swiftly and go back and understand the root cause of why it happened and how do we prevent it happening again." 

All of the banks claim to be doing more to focus on the needs of the customer but the reality is that promises are little more than sound bites. Last month I heard Chris Riddell, a futurist who works with many of the big banks speak and while he agreed that the big banks did have a focus on improving service and trust for customers, they were failing to deliver on such promises. The recent scandal involving CommInsure is still forefront in the minds of many and sadly it’s just one of many banking institution failures where the customer has been well and truly shafted.

Read more at The Age

Do you think any of the big banks or financial institutions actually care about their customers? Have you experienced poor service or bad practice from your bank? Are they, in fact, primarily focused on profit and keeping their shareholders happy?





    COMMENTS

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    4b2
    24th Mar 2016
    10:05am
    We need another Royal Commission into the Financial Industries (Banks, Stock Markets, Insurance, Financial Advisers, etc). The current regulators have been in place for many years now without much to show in improving regulations, or prosecutions for breeches. Internal watch dogs with similar backgrounds never achieve change. This can be said for Police Force, Politicians, The legal profession, etc, etc. Its time for change!
    LiveItUp
    24th Mar 2016
    11:01am
    I've had no problem with banks.

    Too many people lose money today and make the bank a scape goat as they want to blame someone other than themselves. It is as simple as if you are promised a better return than having your money on deposit then there are risks that you may lose your money. If you can't accept that then you have only yourself to blame for breaking the golden rule. Higher returns means a bigger risk of losing money.

    No Royal Commission is necessary to work that out.

    Trouble with Police today is that they take the high road that everyone tells lies and is guilty until proven innocent.
    Peking
    24th Mar 2016
    11:44am
    Heartily in agreement with 4b2. Hardly a day goes by without further revelations about entrenched corruption in banks, particularly in their financial advice companies.
    For many years I have watched the string of Financial Services Inquiries (Campbell in the 70s, Wallis in the 90s, and more recently the Financial System Inquiry of 2013, 2014 after insider whistleblowing) knowing that vested interests were staving off change.
    They all morphed into how to make things better for banks. Even after scandals which revealed advisers were NOT working in the interests of their clients, attempts to achieve even mild change were voted down by the existing Government.

    What can we do? Learn as much as you can and be fierce in ensuring you are not just feeding rent-seekers.
    LiveItUp
    24th Mar 2016
    12:07pm
    The media has certainly do a good job on the banks. When billions of transactions are done daily then you have to expect a few many go wrong. Yes the media loves finding them and then bashing the banks as it's makes them money.
    Anonymous
    26th Mar 2016
    7:16am
    Or maybe your ''holier than though based on assumptions and personal experience'' attitude is wrong, Bonny? Ever consider that possibility?

    I've had moderately positive experiences with banks. One financial planner with NAB was dishonest. When I complained, NAB claimed he was ''independent'' - yet he traded from their building in an office with their logo on the door and had their logo on his business card and letterhead, and was referred by my NAB business-banking manager.

    The other bad experience I had was NAB omitting to credit a significant deposit into a loan account. It took over a year to fix it and they declined to adjust the interest saying it wasn't their policy to adjust interest in such circumstances. Funny, they were quick to adjust interest when doing so was to their advantage! I think, from my hazy memory, I eventually won that battle.

    Overall, I haven't had major complaints about banks, but I have far too much respect for others and far too much appreciation of the real world to try to claim that it's the fault of victims or that the media is bashing unfairly.
    maxchugg
    29th Mar 2016
    10:11am
    I've had no trouble with banks either, mainly because I have as little as possible to do with them.
    The privatization of the Commonwealth Bank removed competition, the only weapon the government had against banks. Since that time greed has been the dominating principle in banking.
    A look at the salary packages which go to the CEOs of banks gives a clear insight into why they have no moral problems with greed.
    MICK
    29th Mar 2016
    1:32pm
    What the banks and many other big businesses are demonstrating is their total disrespect for the rule of law. Given that big business 'owns' governments, who even refuse to collect taxes from these organisations, we are seeing negligent behaviour as they are of the mindset that their pockets are bottomless and average citizens will not venture through the court system. They have a point.
    Having had my phone and internet disconnected by Optus 2 months ago I can attest to the intentional negligence which is forthcoming from a growing number of big business entities. They simply do not care.
    The solution is GOVERNMENT REGULATION. I am thinking that may come if governments have the spine to tax big business....but that one seems not to be on the horizon. I do not even hear Labor talking about this so can only assume that both sides will only give this issue lip service but in reality will DO NOTHING. The fact that the current LNP government came into office and withdrew Labor's legislation to protect average Australians from the big banks tells a complete tale of who is governing the country at present. IT AIN'T THE ELECTED REPRESENTATIVES as there people are puppets who do as they are instructed. The solution is NOT TO VOTE FOR THEM....a tough ask for some of the rusted on Liberals on this website who are no better than the robots running the country.
    It is wonderful to escape the country every year. Would drive a man nuts dealing with the corruption and nonsense passing as 'politics' here. At least we are not yet at the stage Malaysia finds itself in with a ruling dictatorship well under way. Coming maybe.
    jackie
    24th Mar 2016
    10:17am
    I will never trust banks, corporations, governments, police and the legal profession. They have all been infiltrated by evil. The Age of Innocence has gone.
    Polly Esther
    24th Mar 2016
    1:13pm
    You forgot used car salesmen and estate agents.
    Anonymous
    24th Mar 2016
    11:02pm
    Have you ever seen a list of the most trustworthy people Polly Esther? It rates bank managers way down towards the bottom, just above new car salesmen and just below used car salesmen. ?
    summem
    24th Mar 2016
    10:22am
    We've had no problems since we switched to Police Bank about 10 years ago.
    Not a Bludger
    24th Mar 2016
    11:22am
    More moaning from the constantly outraged.

    These banks of ours are pretty good by any world standard and also contribute, by way of profits and dividend, to the living standards of millions of Australians.

    Give them a medal, I say!
    LiveItUp
    24th Mar 2016
    11:31am
    Agree. They contribute a lot to our society and improve the living standards of millions of Australians.
    Anonymous
    24th Mar 2016
    11:45am
    If you have shares in them the dividends are great even though the share price might fluctuate a bit.
    LiveItUp
    24th Mar 2016
    11:50am
    If you bought bank shares many years ago you would have got your capital back many times over in dividends so the share price fluctuation like all shares is of little concern. Miles in front of lending the banks your money for very little return.
    Ageing but not getting old
    24th Mar 2016
    10:14pm
    So NOT A BLUDGER et al: I'm curious; exactly how many millions of Australians have stocks/other financial instruments in our banks which bring them enough money to truly say their living standard has been markedly improved? And where did you source such information?
    HarrysOpinion
    25th Mar 2016
    12:21am
    All of our banks would have collapsed in 2008 had the Federal Government not ridden to the rescue. None were able to refinance their offshore loans because global credit markets had frozen.

    During the crisis, our banks borrowed more than $120 billion using the taxpayers' AAA credit rating, the greatest bailout of any industry in our history.
    Janby
    24th Mar 2016
    11:24am
    After watching the 4 Corners story on Comminsure, I believe there has to be a case brought against members of the Commonwealth Bank who condoned and encouraged fraudulent behaviour. White collar crime is still crime and executives should be brought before courts and if found guilty receive a substantial personal fine but also perhaps a jail sentence. Why is this crime any different?
    LiveItUp
    24th Mar 2016
    11:50am
    And your believe 4 Corners?
    Tom Tank
    24th Mar 2016
    2:25pm
    White collar crime is, in my opinion, worse than other crimes because it is a betrayal of trust. The perpetrators should receive the same penalty as if it was armed robbery because of the trust factor.
    Anonymous
    26th Mar 2016
    7:23am
    I believe there have been victims of fraud by Comminsure, Bonny. There is far too much evidence to argue that there wasn't. And some of them suffered major hurt. And I think your comments are ego-centric and insulting.

    White collar crime is prevalent in Australia. I've been the victim of it - though not by banks. I agree with Tom Tank. There should be very harsh penalties. We need to stamp it out.
    chief
    24th Mar 2016
    11:59am
    yes I am an NAB shareholder and banked with them for over 40 years recently I took out a visa with another bank who sponsor my local football club
    my credit card had a credit balance of $400 only to be told by Nab that it could take anything from 5 to 10 days for that balance to be credited to my cheque account with them I am leaving my cheque account and term deposit a/c but get treated like a criminal things may change if this is the way they treat longstanding customers
    LiveItUp
    24th Mar 2016
    12:05pm
    Use online banking as it takes seconds to transfer money from your credit card to your cheque account.

    Why have a credit balance on a credit card anyway?
    Anonymous
    26th Mar 2016
    7:26am
    Goodness, Bonny! Do you HAVE to imply that everyone whose comments suggest a different experience to yours is dumb or dishonest? It really is offensive. I suspect that like most people who profess to know everything, you actually know very little. Maybe it's time to stop bashing everyone else and start listening and learning about the world?

    24th Mar 2016
    12:07pm
    There has been a culture of gouging customers for many years and it goes like this; one major bank decides to introduce a fee for "whatever" and, invariably, the fee does not require much extra work, if any. There is a public backlash but the heat dies down in time and that's when all of the other banks start charging the same fee. A close check of this will show that each major bank will take turns at being the "bad guy". Watch what will happen with the CBA charging for mailing statements.

    Back in the late 80's, all of the banks started to shed middle range staff to reduce costs. This was wrongly labelled a redundancy scheme but the staff were replaced by younger, less experienced and lower salaried people. The inevitable result was a loss of hundreds of years of experience which included the ability to quickly assess if a staff member was embezzling. Most of the methods of identifying these people were handed down by word of mouth and have never been written up in instruction manuals. It involved, but not exclusive to, checking staff bank accounts to see a pattern of spending, noticing when bills such as motor vehicle registration was due, listening to what staff chatted about what was happening in their private life and a host of other small things.

    None of these things were an invasion of a person's privacy but were readily available to any of the workmates. It was knowing what to look out for that came from experience. There has been a gap in banking ever since and whilst millions are sometimes embezzled, most of those thefts started with small to check out the systems. Not all thefts were uncovered prior to the late 80's but the numbers were extremely low compared with today's figures. It must be remembered that most banks chose not to have small thefts brought to the courts in an effort to maintain an image of trust.
    LiveItUp
    24th Mar 2016
    12:17pm
    Hasn't the CBA had a charge for mailing statements for a few years now?
    Anonymous
    24th Mar 2016
    12:54pm
    Yes Bonny, you may be correct, I may have confused the following;


    "MILLIONS of banking customers are the latest alongside utility and telco consumers facing a “mean” charge for simply receiving their account statements in the post.

    The nation’s largest bank, CBA, is the first of the big four to introduce a new fee slugging customers up to $30 per account per year — $2.50 per statement per month — to receive hard copies.

    The introduction of the new fee comes after the Commonwealth Bank announced a record $4.8 billion cash profit in the six months to December 31.

    CBA put their customer base on notice that from April 1 they “may” be hit with a $2.50 charge if they “opt-in” to receive their statements more frequently."
    LiveItUp
    24th Mar 2016
    1:27pm
    They have provided a free way of getting statements and it costs a lot more to print and send out paper ones. So why not pass the cost onto the customer? Printing statements also comes at a cost to the environment.

    Why not just look them up on line and check them yourself? If you wish you can print them yourself.

    I receive all my bills and statements online. The post is so slow now that I'm glad that very little now comes through the post.

    Everyone but Aust Post seems to have realised that snail mail is now going the way of the dodo.
    Anonymous
    24th Mar 2016
    3:26pm
    You're a good little girl Bonny but then you are computer literate and have access to the internet. I am in a Probus club where the average age is 74 and there are a lot of the members who don't do computers. They have family to help if a computer is needed but how many of us want others to view our bank statements?

    It used to be that bank fees covered the costs of maintaining an account but it seems that we still pay bank fees but also pay for anything else that the banks can get away with. And they try and tell us that they are giving us "service". If we use the term "service" the same way as a horse breeder uses it then perhaps the banks are right.
    LiveItUp
    24th Mar 2016
    5:36pm
    No matter what age you are change does happen and you need to keep up with changes. As you have just realised there is now a cost in not doing so.
    Anonymous
    24th Mar 2016
    5:58pm
    Thank you for your wise words Bonny, I'm sure it's possible to buy computers etc, work up a plan for the internet and get taught how to use it on an Aged Pension.
    LiveItUp
    24th Mar 2016
    6:19pm
    Agree my 87 year old mother did and she was in a nursing home. She downloaded her statements and paid all her bills over the net.
    Anonymous
    24th Mar 2016
    6:55pm
    You and your family have me beaten Bonny, I bow to your arguments.
    Anonymous
    26th Mar 2016
    7:31am
    Bonny and her family are perfect little vegemites against whom EVERYONE should be judged and whose experiences and knowledge should form the basis of all rules and systems in Australian, Old Man.
    It really does get tiring - this ''holier-than-though-know-it-all'' attitude and the arrogance and contempt for other people's genuine difficulties and valid opinions.
    Anonymous
    26th Mar 2016
    7:41am
    Bonny, as it happens my mother also acquired a computer and learned to use it in old age, while on an aged pension, and with no other income. She was remarkably intelligent and self-educated (despite having never gone to high school) and very savvy with money. She also had a lot of family help. She was NOT typical of her age group or social class. She had, however, a paranoid fear of the Internet and would NEVER have accessed a bank account online.

    I also use a computer constantly and I do all my banking online. But, unlike you, I am sympathetic to those who struggle with technology for whatever reason, and I don't think it's fair or reasonable to always blame the victim of a problem, or to assume that everyone should be the same.

    Yes, the world changes. To some extent, we have to adapt - and most people do adapt to gradual change. When changes are rapid and dramatic, there will be groups of people who can't adapt - usually the less privileged who will be most hurt by policies not accommodating their inability to change. In a decent, caring society we respect the fact that our imperfect world presents hurt and challenges for some and we find ways to help, rather than bashing and blaming.

    I think the charge for paper statements to be mailed is exorbitant, and unjustified, and banks should make special provision for older people and those who suffer disadvantage that challenges their ability to use technology. After all, they make massive profits from using their customers' money and paying them token interest. It wouldn't hurt them to soak up the cost of honouring their reporting obligations.
    Tom Tank
    24th Mar 2016
    12:11pm
    What is really needed is a comprehensive body with powers to investigate all aspects of industry and government, like NSW's ICAC.
    Instead of Turnbull targeting the building unions why doesn't he broaden this Commission to embrace both sides of industry, including the banking sector, and Government as well.
    I suppose it would be too much to expect a politician to open up to independent scrutiny but given the recent finding in NSW re political donations it is about time something was done.
    Must go now to view the flypast by the pigs.
    LiveItUp
    24th Mar 2016
    12:24pm
    When are people going to take the responsibility and look after themselves?

    We already have enough rules and taxes on everything that now makes it difficult for the average person to keep up with.

    Enough of this nanny state and country.
    Tom Tank
    24th Mar 2016
    2:22pm
    This is not a case of nanny state and country but in trying to ensure that unscrupulous people do not take advantage of the ordinary person.
    So many people get ripped off in this modern age because they do not understand what charlatan sales-people are doing to them. The days of trusting banks etc are, unfortunately long gone.
    This is not about new laws and regulations but in enforcing those that are already in existence.
    A history of the World is one of the haves not only protecting what they have but in getting even more at the expense of the have-nots.
    Anonymous
    26th Mar 2016
    7:48am
    I agree, Tom Tank. Personal responsibility is all very well, but when there is an imbalance of power and knowledge and a lack of integrity and ethics, you have a problem that can only be addressed by legal means.

    Bonny would have the privileged prosper while the underprivileged suffer and are constantly blamed for their suffering - back to the feudal days when the underprivileged were treated like animals, and that treatment is justified by the privileged because they think that an accident of birth makes them inherently superior and entitled. Sadly, that attitude is prevalent in Australian society today. Joe Hockey evidenced it plainly. Most of our politicians seem to believe they are superior and entitled.

    It's a sick and socially destructive attitude that needs to be stamped out before this country self-destructs as a result of it. Sadly, I don't hold much hope for improvement any time soon.
    HarrysOpinion
    24th Mar 2016
    1:19pm
    Do I think any of the big banks or financial institutions actually care about their customers?
    -No

    Have I experienced poor service or bad practice from your bank?

    -Yes I have on several occassions. The last one being when I wanted to transfer a sizeable amount into a Term Deposit account. Everyone including the branch manager was too busy and not interested. So, I immediately withdrew all my money by bank cheque went next door to a different bank who had the time to see me explain all the options and they got themselves a new customer. So, one bank’s branch doesn’t give a damn, different bank’s branch does. I was with my old bank for 20 years. I noticed that my old bank is now going through a court settlement process to refund its customers for charging excessive fees.

    Are they, in fact, primarily focused on profit and keeping their shareholders happy?

    -Yes. Profit, keeping shareholders happy is the first priority. The second priority are customers with millions in their accounts who qualify for ‘Private Banking and a dedicated bank client service manager'. The rest of the customers are a high priority target to extract money from by way of bank fees by definition such as,’debit cards’ ‘paper statements’, ’internet transactions’, credit card usage and lack of ATMs forcing customers to use another bank’s ATM.
    LiveItUp
    24th Mar 2016
    1:29pm
    Why not ask for a client services manager? I did and if I have any problems I just ring them and they sort it out.
    HarrysOpinion
    24th Mar 2016
    1:37pm
    The client manager wasn't there. I made the effort of going to the bank to handle a sizable transaction on face to face basis. The branch manager who was there wasn't interested in seeing me. Good bye bank! As a bank customer I expect service and attention not to be treated with arrogance.
    KSS
    24th Mar 2016
    1:40pm
    HS anyone who has a 'managed superfund' most likely is a shareholder in the banks! Pretty sure they will be happy if they are the banks' first priority!!
    HarrysOpinion
    24th Mar 2016
    2:55pm
    KSS-The banks are not interested in little individuals BUT bulk funds investments in billions, sure. Members of Superfunds are not shareholders, they don't get regular dividends, they just get annual interest.
    keychange
    24th Mar 2016
    1:28pm
    The big banks have a culture of denial and looking for someone to blame. They pretend to be switched on but work in a mire of outdated policies and attitudes. They provide no obvious avenue for feedback - it's one thing to make an individual employee responsible but there has to be a clear path to go over that individual's head and escalate an issue. If you have a concern use Facebook or Twitter and only then will you get some action.
    KSS
    24th Mar 2016
    1:42pm
    "The big banks have a culture of denial and looking for someone to blame."

    And the bank customers don't keychange? Seems to me that's all people do these days - outsource responsibility and find someone else to blame for their decisions.
    LiveItUp
    24th Mar 2016
    1:55pm
    It's not the big banks that have a culture of denial and looking for someone to blame. It's their customers doing this.

    Banks do provide avenues for feedback and have compensated me where their rules have not been easily understood. People need to rise up and actually read those PDSs so they know their rights and obligations. How many people do this? I have used them many times to prove a point myself both with banks and other organisations.

    The customer culture has now developed into one where if someone doesn't know their rights and thinks the bank is at fault they grab which ever media will listen. I sometimes think the media just runs with it as it makes a good story without checking their facts.

    24th Mar 2016
    2:32pm
    I make it a practice to be wary of EVERYONE and watchful of ALL in differing degrees. Let your guard down and you become vulnerable to ANYTHING
    GiGi
    24th Mar 2016
    4:30pm
    Well, Bonny, you're one in a million: the other 999999 would heartily disagree with you that all is well in the banking and financial services sector! As 4b2 says, we badly need a Royal Commission. We wont get one of course, because this Turnbull government is only interested in union bashing. I'm thoroughly disappointed in Turnbull. I thought he might well be a statesman, but a statesman he definitely is not!!
    Anonymous
    24th Mar 2016
    5:35pm
    welcome to another whinger.
    Anonymous
    24th Mar 2016
    8:24pm
    himsquirt, you really shouldn't be visiting this site while you are in that clinic under observation. Your medication will take longer to work if you unduly rile yourself by reading someone's which they are free to make, even though it doesn't conform to your illogical thinking. Be careful or you may be back in those restraints. Remember last time?
    Thomas
    24th Mar 2016
    5:34pm
    Banks need to realise that their customers are more important than their shareholders! If they didn't have customers, they wouldn't need shareholders but if they didn't have shareholders, they would still have customers!
    LiveItUp
    24th Mar 2016
    5:41pm
    If they didn't have shareholders {owners) banks would simply not exist so there would be no customers. A lot of customers are also shareholders in banks and I'm not going to tell them that customers are more important than they are. History also tells us that being a shareholder has been a better investment than being a bank customer especially over the long term.
    Anonymous
    26th Mar 2016
    7:53am
    Customers ARE more important than shareholders. In a healthy business world, the priorities are ''customers first, employees second, shareholders third'', because good business demands happy customers who generate growth, and happy employees whose happiness leads them to want to serve well - which then automatically generates good profits so shareholder value is maximized.

    Shareholders ALWAYS do best when customers are the priority.

    If we stopped blaming the victim and condoning dishonest profiteering, and returned to the rules of good business, this country might once again prosper.
    SGW
    26th Mar 2016
    7:24pm
    Do you think any of the big banks or financial institutions actually care about their customers? Have you experienced poor service or bad practice from your bank? Are they, in fact, primarily focused on profit and keeping their shareholders happy? YES
    Adrianus
    29th Mar 2016
    6:17pm
    I don't want to be the one to spoil all your fun with all this bank bashing, but let's have some facts. This is not about the culture of all the big banks. This story is about one bank and it's refusal to pay insurance claims. The culture of the CBA has been a disaster from the time they merged with a recently demutualised Life Insurance giant with a tarnished culture. CBA depositors have a culture too and it was not lost when Keating sold off a slice of the bank, but it should have been. (I think he got $6 per share.) This is the biggest issue and what you do about it is anyone's guess. Eventually CBA depositors will become more sophisticated and realise that the CBA is a retail business and the stock is M1.
    Seriously, who takes out an insurance policy without asking questions about policy wording?
    On the other hand APRA can do more by demanding these insurance companies update their policy wording and definitions.
    ritty
    10th May 2016
    8:23pm
    I have read all the comments and it reads like a comedy. It appears that most presume to think they are perfect and have never upset anyone. Have a look in the mirror. This is the real world. Nobody is perfect. Yes the Banks make mistakes and though they are Companies they are run by humans and I venture to say all humans upset others at some time. Not intentionally. A Company to prosper puts its customers first and I know from a banker's long experience that equally applies and is applied by the Banks, but don't overlook the human element and that applies to the people both sides of the counter. A Royal Commission would be just a waste. If the Banks need one then so do an assortment of many other industries. The Banks, if you get your blinkers off, are very good Corporate citizens. They are probably the most regulated of any industry and are a Pier on the World stage and the envy of many Countries. Count yourselves lucky. Yes, the Government guaranteed deposits at the time of the Financial Crisis, but only to stop a run on our Banks because of the debacle overseas. It cost the Government nothing but would have cost them trillions had the run occurred.
    ritty 10/5/16.